National Merger Notification Thresholds
Presently there is a vigorous ongoing debate in Serbia on the possible novel solutions applicable to the new Law on Protection of Competition that is expected to be adopted in the near future, as it was emphasized again during the International Conference “Challenges in the Implementation of Competition Policy on the Path towards the EU” organized by the Serbian Commission for Protection of Competition in Belgrade on 7 April 2017. One of the open issues raised on that occasion was whether the national notification threshold levels for merger control should be revised. Having in mind that Serbia is a candidate country currently under negotiations for accession to the EU, the experience of the countries in the region in the context of aligning and interplay of national competition law with the EU competition law may be invaluable.
Even though the vast majority of notified mergers do not pose competition problems and are cleared after a routine review, the EU Commission has prohibited the proposed takeover of Cemex Croatia by HeidelbergCement and Schwenk under the EU Merger Regulation on 5 April 2017. The Commission had strong concerns that the takeover would have significantly reduced competition in grey cement markets and increased prices in Croatia. What is interesting to note is that the mentioned transaction would not have triggered the merger notification thresholds as set in the Croatian Law on Protection of Competition if the Croatian Competition Authority had had the competence to decide on the case. That leads to rather contradictory situation that a merger that is considered as too insignificant for notification requirement from the standpoint of the national legislator was prohibited as anticompetitive due to the effects on that very same market based on the EU law. The cumulative merger notification requirements and respective notification thresholds in Croatia are set as follows:
the total turnover (consolidated aggregate annual turnover) of all the undertakings – parties to the concentration, generated through the sale of goods and/or services in the global market, amounts to at least HRK 1 billion (ca. EUR 33 million) in the financial year preceding the concentration and in compliance with financial statements, where at least one of the parties to the concentration has its seat and/or subsidiary in the Republic of Croatia, and
the total turnover of each of at least two parties to the concentration generated in the national market of the Republic of Croatia, amounts to at least HRK 100 million (ca. EUR 13.43 million) in the financial year preceding the concentration and in compliance with financial statements.
As a comparison, the respective merger notification thresholds as set in the Serbian Law on Protection of Competition currently in force are alternatively set as follows:
- Worldwide + national market: total annual revenue of all concentration participants generated on the worldwide market in the preceding financial year exceeds EUR 100 million, provided that revenue of at least one concentration participant generated on the market of the Republic of Serbia exceeds EUR 10 million; or
- National market: total annual revenue of at least two concentration participants generated on the market of the Republic of Serbia exceeds EUR 20 million in the preceding financial year, provided that the revenue of each of at least two concentration participants generated on the market of the Republic of Serbia exceeds 1 million EUR, in the same period.
It is also noteworthy to add that part of the same transaction was also the acquisition of Cemex Hungary as the second target. The decision of the EU Commission covers the entire transaction, but the EU Commission referred the analysis of the deal’s potential effects in Hungary to the Hungarian competition authority. The EU Commission received no request for referral for any other part of the transaction, including Croatia.